The Fast Track to Face Time

It's the eternal question asked by every entrepreneur who ever tried to raise capital: What do venture capitalists want? The answer, according to the Web page of a prominent Silicon Valley venture firm, is someone to trust. "The successful venture capitalist invests in people first," it says.

But how can you get a venture capitalist to truly know you--as a person? Unless you know the right somebody, getting face time with VCs can be tricky. One thing's for certain: never contact them directly. "You'll get a form letter back from an assistant to an assistant to an assistant," says Chris Larsen, CEO and cofounder of E-Loan, in Dublin, Calif., an on-line mortgage broker backed by $30 million in venture capital.

That means no cold calling and no E-mailing. "It's a referral I'll pay attention to first," says Roland Van der Meer, general partner at Communications Ventures, in Palo Alto, Calif. "Half the deals I see come through attorneys."

While corporate lawyers are certainly the safest bet for plugging into VC networks, there are other ways to go. "Accountants are good; angels are good, too," says Mike Levinthal, a partner at Mayfield Fund, in Menlo Park, Calif.

Sometimes you have to play the waiting game for months, even in the fast-paced world of E-commerce. Larsen and his cofounder, Janina Pawlowski, searched in vain for financing for almost a year and a half. "My cofounder was a woman, and I think that was a factor with some of the VCs," says Larsen, who learned to rely on business-school connections to get an audience with venture firms.

E-Loan's funding quest began in mid-1996, when the cofounders decided to convert their loan brokerage into a Web site. Sixteen months--and many rejection letters--later, E-Loan at long last received first-round funding: $5.5 million from Benchmark Capital and Technologies Partners, both in Menlo Park. At that point, E-loan.com had been up and running for four months, floated by $100,000 scraped up from friends and family.

Since then, VCs have poured another $25 million into E-Loan, in return for a 45% equity stake in the company, which plans to go public. If there's a conclusion to draw here, says Larsen, it's that VCs can be influenced by a track record of operations. Levinthal would agree. In 1994 Mayfield Fund gave $3 million to University Games, whose nine-year growth rate dwarfed the board-game industry's average.

University Games founder Bob Moog had to decide between Mayfield and Robertson Stephens. "In the end the personal mix at Mayfield was better for us," he recalls. Married with kids, Moog nonetheless stayed out drinking one night with a Mayfield partner until 2 in the morning. Says Moog, "I told my wife I was gonna go out and raise a few million."